AOL's previous deal: not exactly a Time Warner

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Last year's AOL, IBM and Video Ezy media convergence deal has achieved as low as 6 per cent of the anticipated consumer takeup, according to Video Ezy.

Announced in October, the deal sought to provide consumers with an IBM Aptiva 13A PC (specially designed for the deal but worth an estimated $1400), unlimited AOL membership and eight videos per week for two years. The cost of the deal, paid weekly or monthly, came to about $2700. The offer closed on December 31.

Clinton Hayes, Video Ezy's technology director, said AOL had anticipated around 5000 consumers would take up the deal, but he said only between 300 and 400 contracts had been taken out. "That doesn't exactly fall into what you'd call the 'successful' category," he said.

Barry Shawyer, managing director of Sass, the marketing company that created and coordinated the deal, said exact figures were not yet available because contracts were still being finalised with the project's finance company, Equico.

Shawyer agreed the response to the deal had been "lukewarm", but accredited this to a high percentage of applicant rejections. He said Equico did not consider between 30 and 40 per cent of applicants financially viable as they "weren't working".

Hayes said complexity and price were the main reasons for the disappointing consumer reception to the offer.

"When you've got the combination of the computer, the AOL component and our [video] component, the logistics of putting that together and the requirements under various laws . . . it was far more complex than we could have imagined," he said.

"When you're asking the consumer to spend over a thousand dollars on a project, it's a little unrealistic to expect huge volumes."

An IBM spokesperson said any deals finalised were the result of marketing, which the spokesperson said was AOL's responsibility.

Hayes agreed, adding that AOL's marketing of the offer did not make it sufficiently clear to consumers what the deal comprised.www.consult's Ian Webster said the result was not so disappointing as the target consumer takeup was high. "But people overestimate the sort of leverage these branding alliances are able to provide," he said. "They are often ambitious with these co-branding deals."

Video Ezy partnered last week with technology company POS Media to form a joint venture called Ezy Plus. Its aim is to provide Internet, telecommunications and video-on-demand to consumers, Hayes said.

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